TEL AVIV, Israel (AP)  Israel called off its self-declared
policy of restraint Saturday, just hours after a suicide bomber killed 17 young
Israelis and wounded 90 outside a Tel Aviv disco in the bloodiest terror attack
in five years. All but one of those killed and many of the wounded were recent
immigrants from the former Soviet Union. The Israeli Cabinet said after a seven-hour
emergency session  an extremely rare occurrence on the Jewish Sabbath
 that it held Palestinian leader Yasser Arafat directly responsible for
Friday night's blast and other recent attacks. Israel also informed Arafat that
he was barred from using the international airport in the Gaza Strip, meaning
he cannot return from the West Bank to his headquarters in Gaza, Palestinian
security officials said.

Arafat has formed a "coalition
of terrorism" in the areas under his control, the Cabinet said in the harshest
condemnation of the Palestinian leader in eight months of fighting.

In the West Bank town of Ramallah, Arafat said he was ready
to work for an "immediate and unconditional cease-fire," but did not say what
steps he was prepared to take.

Israeli Cabinet ministers dismissed the offer, saying they
would not take it seriously unless Arafat arrested Islamic militants and reined
in his security forces.

Past experience has shown it is very difficult for Arafat
to control the militants  even at times of close Israeli-Palestinian security
cooperation. Even when Arafat jailed hundreds of them, suicide bombings were
still carried out.

The Israeli Cabinet said in a statement it would take all
actions necessary to protect Israeli citizens, but did not elaborate.

Last week, Israeli Prime Minister Ariel Sharon had declared
a unilateral cease-fire, saying that Israeli troops would not initiate actions
against the Palestinians, only respond when lives were threatened.

Asked about the truce, Transport Minister Ephraim Sneh
told The Associated Press that "there is no cease-fire because we are under
attack."

Other Cabinet ministers said Israel did not plan to target
Arafat directly or recapture areas under Palestinian control.

In the West Bank and Gaza, the Palestinian Authority ordered
its employees to leave their offices, fearing Israeli air strikes. In the past,
Israel shelled Palestinian security installations, but not civilian offices.

In the town of Nablus, where an Israeli air raid last month
killed 11 policemen, residents were urged to stay indoors.

Israel sealed off Palestinian towns and villages in the
West Bank, barring residents from entering and leaving. In Gaza, Palestinian
fishermen were ordered to return to shore, as Israeli patrol boats enforced
a sea blockade. Israel also closed crossings from the Palestinian areas to Egypt
and Gaza.

In Ramallah, ambulances parked near the homes of senior
Palestinian officials, as well as close to Arafat's headquarters. Residents
of five homes close to the office of Palestinian intelligence chief Amin al-Hindi
were told to leave.

At An Najah University in Nablus, students were evacuated,
including a group that was in the middle of taking a chemistry exam.

Crowds of angry Israelis, meanwhile, gathered outside the
Defense Ministry in Tel Aviv, where the Cabinet was meeting, and at the gates
of a mosque across the street from the disco. Demonstrators chanted "Death to
the Arabs" and demanded that Sharon order harsh retaliation.

Several people threw stones at Muslim worshippers emerging
from the mosque, and a few worshippers also threw stones. Police, who scuffled
with a few Israelis, reported a several arrests and injuries, including a number
of police officers.

Israeli stone-throwers also attacked a popular Arab-owned
bakery near the scene of the explosion, breaking windows.

Friday's explosion, heard for miles around the city, went
off around 11 p.m. Friday in front of the Pacha nightclub in a former aquarium
building that faces a promenade lined with restaurants, bars, hotels and office
towers.

"I was about to enter (the disco), suddenly I looked in
the direction of the blast, I saw people thrown backward," said Dudi Nachum,
21. "I saw parts of a brain, things I have never seen before. It was terrible."

Scores of police cars and ambulances raced through the
jammed streets of the Mediterranean metropolis to reach the scene.

Bodies covered by white and black tarps lay on the ground
in front of the entrance to the nightclub. One of the victims appeared to be
a girl in her early teens, wearing a red top, her arms and legs sticking out,
platform shoes on her feet.

Hospital officials said 17 Israelis were killed, including
two sisters, ages 16 and 18. Of the wounded, 15 remained in critical or serious
condition Saturday.

The explosive contained ball bearings, nails and screws
that caused particularly severe injuries when they flew out in all directions.

About a dozen cars parked in front of the club were heavily
damaged by the blast, their windows shattered and pieces of flesh and blood
splattered on them. Victims' personal effects, a crushed case of Tuborg beer
and Italian mineral water bottles were scattered in the lot.

Since fighting erupted last September, 484 people have
been killed on the Palestinian side  including Friday's attacker 
and 104 on the Israeli side.

Friday's blast was the deadliest since a series of suicide
bombings by Islamic militants in the spring of 1996.

There were conflicting reports about who was responsible
for the attack. The Qatar-based Al Jazeera satellite station said a group calling
itself the Palestinian Hezbollah claimed responsibility. Abu Dhabi TV said the
assailant apparently was a member of the militant Islamic Jihad group from the
West Bank town of El Bireh.

President Bush demanded Arafat condemn the bombing and
call for an immediate cease-fire. And U.N. Secretary-General Kofi Annan said
he was horrified by the bombing.

Friday's carnage came a week after the United States restarted
efforts to bring the two sides together again.

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